While things are rosy in the large-display TV industry, not all large-format PDP manufacturers are fairing equally well. A recent report from Displaybank in Korea confirmed what most in the industry had already suspected, while 2005 PDP panel shipments surged 95% (to over 7M units) from 2004, the top three PDP panel makers - namely Matsushita, LGE and Samsung SDI - dominate the plasma market with a combined 87% market share, while laggards FHP (Hitachi), Pioneer and others have seen diminishing shares as the gap between winners and losers significantly widens. But what happened to create this gap between winners and losers in PDP manufacturing?

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly &
Microdisplay Report

As next-generation LCD fab investment fueled the move to larger, less expensive LCD panels, it boosted capacity and LCD panel supply. This drove the market price downward, opening the door to a plethora of 2nd- and 3rd-tier LCD-TV vendors who flooded the market and dropped the old market-pricing floor - catching the likes of Pioneer, FHP and other less-efficient PDP makers unable to respond in kind.

Early on, both Samsung and Matsushita read the market trends correctly. They saw LCD industry capacity growth as a threat to the large (40-inch and up) display market. While industry pundits were saying LCDs would take years to efficiently target the large display space, the big three PDP vendors were investing heavily in new glass capacity and cost-down strategies like single-scan drive technology. These moves allowed them to keep pace with the downward price march of LCD panels throughout 2005, gaining market share and booking solid profits throughout the selling season.

In hindsight it’s easy to see that the winning strategy came from timely investments leading to productivity gains - along with a healthy R&D effort to drive out costs in the face of fierce LCD display competition.

So we are faced with a rich-poor scenario with 87% market share owned by the top three (rich) vendors and the rest going to the likes of Pioneer, FHP and Orion. Two other Taiwan vendors, CPT and Formosa, withdrew from the market in 2005.

That’s not to say the remaining players cannot make a comeback. Pioneer has an excellent brand, particularly in the US, and its Elite series is still considered by many knowledgeable observers to be the industry’s gold standard. Also, the company has recently announced significant changes in production, organization and management to get back on track.

Overall, the PDP industry is healthy. The top three manufacturers have announced plans to increase capacity 55% in 2006, targeting upwards of 11M units for this year as the industry reaches an admirable economy of scale and continues to drive down production costs.

The coming PDP/LCD battle in 2006 is likely to be fought in the 50-inch, full-HD display space as yet another round of next-generation fab capacity begins to ramp in the LCD camp. Unit efficiencies are growing as Gen 7 and 7.5 LCD plants come on-line, with Gen 8 on the horizon.

The question is will Pioneer, FHP and Orion be ready for the next round of price cuts and capacity pressures? Can they respond not only to the fierce PDP industry competition, but also to the looming LCD juggernaut as it does its best to roll towards large-display market dominance? Stay tuned.